IN THE UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF OHIO 

EASTERN DIVISION 

UNITED STATES OF AMERICA ex rel. 

DAVID L. HUMPHREY, 

 Plaintiff, 

 vs. Civil Action 2:11-CV-361 

 Magistrate Judge King 

 

HOCKING, ATHENS, PERRY COMMUNITY 

ACTION AGENCY, INC., et al., 

 Defendants. 

OPINION AND ORDER

 This matter is before the Court, with the consent of the parties 

pursuant to 28 U.S.C. § 636(c), for consideration of Plaintiff’s 

Motion for Leave to File Third Amended Complaint Instanter

(“Plaintiff’s Motion to Amend”), Doc. No. 61. Defendants oppose 

Plaintiff’s Motion to Amend on the basis that amendment would be 

futile. See Doc. Nos. 62-63, 65-66. Plaintiff has filed a reply, 

Doc. No. 67, and numerous defendants, without first seeking leave, 

have filed a sur-reply. Doc. No. 69. Also before the Court is 

Defendants’ Joint Motion for Hearing, Doc. No. 64. For the reasons 

that follow, Plaintiff’s Motion to Amend is DENIED. Defendants’ Joint 

Motion for Hearing is DENIED as moot. 

I. Background 

 This is a qui tam action brought by relator David Humphrey on 

behalf of the United States under the False Claims Act (“FCA”), 31 

U.S.C. § 3730. Plaintiff alleges that defendants have submitted false 

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claims in connection with the 1993 lease and 2008 acquisition of a 

building by the Hocking, Athens, Perry Community Action Agency, Inc. 

(“HAP”) for its Head Start Program. Plaintiff alleges that HAP 

entered into a 15 year lease (the “Lease”) to acquire a building and 

land in New Lexington, Ohio (the “Property”) to be used for the Perry 

County Head Start Program. Second Amended Complaint, ¶ 16. HAP 

allegedly used Head Start funds to obtain and renovate the property 

without receiving prior approval from the United States. Id. at ¶¶ 

44-45, 51. The United States declined to intervene. 

 The Preliminary Pretrial Order, Doc. No. 24, required that all 

motions or stipulations addressing the parties or pleadings be filed 

by December 30, 2011. Plaintiff amended the Complaint on November 17, 

2011, id., and was granted leave on July 18, 2012, upon unopposed 

motion, to file a Second Amended Complaint. See Order, Doc. No. 49. 

Plaintiff now seeks leave to file a third amended complaint to assert 

a claim under 31 U.S.C. § 3729(a)(1)(G) against two new parties. 

Plaintiff’s Motion to Amend, p. 2. 

 The Proposed Third Amended Complaint, attached to Plaintiff’s 

Motion to Amend as pp. 7-18 and Doc. Nos. 61-1, 61-2, purports to 

state an FCA claim against Attorney John P. Mazza, HAP’s attorney in 

this action, and Douglas Stanley, a former executive director at HAP. 

Proposed Third Amended Complaint, ¶¶ 13-14, 57-68. The Proposed Third 

Amended Complaint alleges the following: 

 “HAP was obligated to record a ‘Notice of Federal Interest’ in 

the real estate records to protect the Federal government’s interest 

in the Property for Head Start funds used to acquire and renovate the 

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Property.” Id. at ¶ 48. Attorney Mazza, acting “under the direction 

or consent of Stanley,” “sent a letter dated November 21, 2011 to the 

Office of Head Start.” Id. at ¶¶ 58, 68. The letter allegedly 

contains three knowingly false statements about the terms of the 

Lease, the Lease payments, and the classification of the Lease for 

accounting purposes. See id. at ¶¶ 60-66. Attorney Mazza’s alleged 

misrepresentation about the total Lease payments was “intended to 

avoid the government’s Notice of Interest.” Id. at ¶ 61. The 

Proposed Third Amended Complaint further alleges that the letter “is a 

false record and statement knowingly made in an attempt to avoid the 

Federal government’s Notice of Federal Interest.” Id. at ¶ 59. See 

also id. at ¶ 67 (“It is clear Mazza knowingly created a material 

false record or statement for the purpose of avoiding HAP’s obligation 

to file the Notice of Federal Interest.”). 

II. Standard 

 Whether or not to grant leave to amend a pleading under Fed. R. 

Civ. P. 15(a)(2) falls within the district court’s discretion. 

General Elec. Co. v. Sargent & Lundy, 916 F.2d 1119, 1130 (6th Cir. 

1990). In exercising that discretion, the trial court may consider 

such factors as “undue delay, bad faith or dilatory motive on the part 

of a movant, repeated failure to cure deficiencies by amendments 

previously allowed, undue prejudice to the opposing party by virtue of 

allowance of the amendment [and] futility of the amendment.” Foman v. 

Davis, 371 U.S. 178, 182 (1962). 

 “A proposed amendment is futile if the amendment could not 

withstand a Rule 12(b)(6) motion to dismiss.” Rose v. Hartford 

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Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir. 2000) (citing 

Thiokol Corp. v. Dep’t of Treasury, Revenue Div., 987 F.2d 376, 382-83 

(6th Cir. 1993)). A motion to dismiss under Rule 12(b)(6) attacks the 

legal sufficiency of the complaint. See Roth Steel Prods. v. Sharon 

Steel Co., 705 F.2d 134, 155 (6th Cir. 1983). In determining whether 

dismissal on this basis is appropriate, a complaint must be construed 

in the light most favorable to the plaintiff, and all well-pleaded 

facts must be accepted as true. See Bower v. Fed. Express Corp., 96 

F.3d 200, 203 (6th Cir. 1996); Misch v. Cmty. Mut. Ins. Co., 896 F. 

Supp. 734, 738 (S.D. Ohio 1994). 

The United States Supreme Court has explained that “once a claim 

has been stated adequately, it may be supported by showing any set of 

facts consistent with the allegations in the complaint.” Bell 

Atlantic Corp. v. Twombly, 550 U.S. 544, 546 (2007). However, a 

plaintiff’s claim for relief “requires more than labels and 

conclusions, and a formulaic recitation of the elements of a cause of 

action will not do.” Id. at 555. In addition, complaints alleging 

FCA violations must “comply with Rule 9(b)’s requirement that fraud be 

pled with particularity because ̔defendants accused of defrauding the 

federal government have the same protections as defendants sued for 

fraud in other contexts.’” Chesbrough v. VPA, P.C., 655 F.3d 461, 466 

(6th Cir. 2011) (quoting Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 

563 (6th Cir. 2003)). “Rule 9(b) requires that ̔in alleging fraud or 

mistake, a party must state with particularity the circumstances 

constituting fraud or mistake. Id. (quoting United States ex rel. 

Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 503 (6th Cir. 

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2007)). “Factual allegations must be enough to raise a right to 

relief above the speculative level[.]” Twombly, 550 U.S. at 555. 

Accordingly, a complaint must be dismissed – and amending a complaint 

is futile – if the complaint does not plead “enough facts to state a 

claim to relief that is plausible on its face.” Id. at 570.

III. Discussion 

 The FCA provides that any person who “knowingly makes, uses, or 

causes to be made or used, a false record or statement material1

 to an 

obligation to pay or transmit money or property to the 

Government . . . is liable to the United States Government for a civil 

penalty.” 31 U.S.C. § 3729(a)(1)(G). “Section 3729(a)(1)(G) claims 

are often characterized as ̔reverse false claims,’ as they implicate 

situations in which the charge is falsehood in paying monies to the 

United States rather than in securing payment from the government.” 

United States ex rel. John Stone v. OmniCare, Inc., No. 09C4319, 2011 

U.S. Dist. LEXIS 73123, at *7 (N.D. Ill. July 7, 2011) (quoting United 

States ex rel. Lamers v. City of Green Bay, 998 F. Supp. 971 (E.D. 

Wis. 1998)). 

The FCA did not originally define the term “obligation.” 

See Am. Textile Mfgs. Institute, Inc. v. Ltd., Inc., 190 F.3d 

729, 736 (6th Cir. 1999). On May 20, 2009, Congress enacted the 

Fraud Enforcement and Recovery Act of 2009 (“FERA”), Pub.L. No. 

111–21, 123 Stat. 1617 (May 20, 2009), § 4 of which amends the 

FCA to, inter alia, define “obligation.” Id. Under that 

                                                            

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 “[T]he term ‘material’ means having a natural tendency to influence, or be 

capable of influencing, the payment or receipt of money or property.” 31 

U.S.C. § 3729(b)(4). 

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provision, an “obligation” is defined as “an established duty, 

whether or not fixed, arising from an express or implied 

contractual, grantor-grantee, or licensor-licensee relationship, 

from a fee-based or similar relationship, from statute or 

regulation, or from the retention of any overpayment.” 31 U.S.C. 

§ 3729(b)(3). 

The Senate Judiciary Committee Report, S. Rep. No. 111-10 (Mar. 

23, 2009), indicates that FERA 

addresses [the] current confusion among courts that have 

developed conflicting definitions of the term “obligation” 

in Section 3729(a)(7). The term “obligation” is now 

defined under new Section 3729(b)(3) and includes fixed and 

contingent duties owed to the government—including fixed 

liquidated obligations such as judgments, and fixed, 

unliquidated obligations such as tariffs on imported goods. 

It is also noteworthy to restate that while the new 

definition of “obligation” expressly includes contingent, 

non-fixed obligations, the Committee supports the position 

of the Department of Justice that current section 

3729(a)(7) []speaks of an “obligation,” not a “fixed 

obligation.” By including contingent obligations such as, 

“implied contractual, quasi-contractual, grantor-grantee, 

licensor-licensee, fee-based, or similar relationship,” 

this new section reflects the Committee's view, held since 

the passage of the 1986 Amendments, that an “obligation” 

arises across the spectrum of possibilities from the fixed 

amount debt obligation where all particulars are defined to 

the instance where there is a relationship between the 

Government and a person that “results in a duty to pay the 

Government money, whether or not the amount owed is yet 

fixed.” 

Id. at p. 14 (citations omitted) 

 In the case presently before the Court, the Proposed Third 

Amended Complaint alleges that Attorney Mazza made knowingly 

false statements in a letter to the Office of Head Start “in an 

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attempt to avoid the Federal government’s Notice of Federal 

Interest.” Proposed Third Amended Complaint, ¶ 59. It is 

further alleged that “HAP was obligated to record [the] ‘Notice 

of Federal Interest’ in the real estate records to protect the 

Federal government’s interest in the Property for Head Start 

funds used to acquire and renovate the Property.” Id. at ¶ 48. 

 The Proposed Third Amended Complaint fails to plead a 

violation of § 3729(a)(1)(G) with particularity because it has 

not identified an obligation to pay or transmit money or property 

to the Government. According to the Proposed Third Amended 

Complaint, the Notice of Federal Interest will “protect the 

Federal government’s interest in the Property” once it is 

recorded. Id. The Notice of Federal Interest is not alleged to 

be an established duty or obligation to pay money or property 

owed to the Government. It is not a judgment or retention of an 

overpayment, nor is it alleged to arise from an implied 

contractual, quasi-contractual, grantor-grantee, licensorlicensee, fee-based, or similar relationship. The Proposed Third 

Amended Complaint simply has not alleged, apart from threadbare, 

conclusory recitals, that the Notice of Federal Interest is a § 

3729(a)(1)(G) “obligation” to pay or transmit money or property 

to the Government. The Proposed Third Amended Complaint

therefore fails to allege a colorable cause of action against 

Attorney Mazza and Douglas Stanley. Accordingly, Plaintiff’s 

Motion to Amend is DENIED as futile. 

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 Based on the foregoing, Defendants’ Joint Motion for Hearing, 

Doc. No. 64, is DENIED as moot. 

WHEREFORE, based on the foregoing, Plaintiff’s Motion to 

Amend, Doc. No. 61, is DENIED. Defendants’ Joint Motion for 

Hearing, Doc. No. 64, is DENIED as moot. 

February 7, 2013 s/Norah McCann King_______ 

 Norah McCann King 

 United States Magistrate Judge 

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